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DERIVATIVE INSTRUMENTS | 12 Months Ended
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Dec. 31, 2023
General Discussion of Derivative Instruments and Hedging Activities [Abstract] |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company's risk management strategy includes the use of derivative financial instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. ASC 815, "Derivatives and Hedging" ("ASC 815"), requires the Company to recognize all of its derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, an entity must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. Gains and losses on derivatives instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that are attributable to a particular risk), are recorded in accumulated other comprehensive income (loss) and reclassified into the statement of income in the same accounting period in which the designated forecasted transaction or hedged item affects earnings. The Company entered into option and forward contracts to hedge a portion of anticipated New Israeli Shekel ("NIS"), Indian Rupee ("INR") and Philippine peso ("PHP") payroll and benefit payments. These derivative instruments are designated as cash flow hedges, as defined by ASC 815 and accordingly are measured at fair value. These transactions are effective and, as a result, gain or loss on the derivative instruments are reported as a component of accumulated other comprehensive income (loss) and reclassified as payroll expenses, facility expenses or finance expenses, respectively, at the time that the hedged income/expense is recorded.
| Notional amount |  | Fair value (Level 2 within the fair value hierarchy)
| December 31, |  | December 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
Forward contracts |  |  |  |  |  |  |
expenses NIS | 107,940 |  |  | 111,253 |  |  | 253 |  |  | (7,862) |
expenses INR | 62,023 |  |  | 46,406 |  |  | 147 |  |  | (1,379) |
expenses PHP | 11,577 |  |  | 11,235 |  |  | 302 |  |  | 651 |
| $ | 181,540 |  |  | $ | 168,894 |  |  | $ | 702 |  |  | $ | (8,590) |
The Company currently hedges its exposure to the variability in future cash flows, generally for a maximum period of one year. As of December 31, 2023, the Company expects to reclassify all of its unrealized gains and losses from accumulated other comprehensive income to earnings during the next fifteen months. The fair value of the Company's outstanding derivative instruments at December 31, 2023 and 2022 is summarized below:
|  |  | Fair value of derivative instruments
|  |  | December 31,
| Balance sheet line item |  | 2023 |  | 2022
Derivative assets: |  |  |  |  |
Foreign exchange forward contracts | Prepaid expenses and other current assets |  | $ | 702 |  |  | $ | 651 |
Derivative liabilities: |  |  |  |  |
Foreign exchange forward contracts | Accrued expenses and other liabilities |  | $ | — |  |  | $ | (9,241) |
The effect of derivative instruments in cash flow hedging relationship on income and other comprehensive income for the years ended December 31, 2023, 2022 and 2021 is summarized below:
| Amount of gain (loss) recognized in other comprehensive income on derivative, net of tax (effective portion)
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Derivatives in foreign exchange cash flow hedging relationships: |  |  |  |  |
Forward contracts | $ | (5,300) |  |  | $ | (18,223) |  |  | $ | 4,993 |
Option contracts | — |  |  | — |  |  | 31 |
| $ | (5,300) |  |  | $ | (18,223) |  |  | $ | 5,024 |
Derivatives in foreign exchange cash flow hedging relationships for the years ended December 31, 2023, 2022 and 2021 is summarized below:
|  |  |  | Amount of gain (loss) reclassified from other comprehensive income into income (expenses), net of tax (effective portion)
|  |  |  | Year Ended December 31,
|  | Statements of income line item |  | 2023 |  | 2022 |  | 2021
Option contracts to hedge payroll and facility expenses |  | Cost of revenues and operating expenses |  | $ | — |  |  | $ | — |  |  | $ | (771) |
Forward contracts to hedge payroll and facility expenses |  | Cost of revenues, operating expenses and financial expenses |  | 13,335 |  |  | 7,189 |  |  | (5,157) |
|  |  |  | $ | 13,335 |  |  | $ | 7,189 |  |  | $ | (5,928) |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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